What Property Managers Think About Home Warranty

We have asked some of our property manager to provide us with their opinion on home warranty companies/service.

Their opinions are expressed here.

The opinions are should not use as an advice on what you should or should not do when it comes to home warranty – You can be the judge of it.

Home warranty companies differ greatly.

Some are better than others, but overall then aren’t good for property manger’s and owners.

We want to service our tenants.

If your AC breaks down and its 90 degrees you want service within a reasonable time frame.

HW’s wont come for days and when they come out the repair isn’t covered.

Happy tenants are long term tenant’s.

My job is to save the owner money.

I recommend preemptive. maintenance, service the HVAC system every 12 months, make the tenants change AC filter, etc.

Plus I have a construction background as should any PM.

I know what things cost to repair.

Our vendors understand that we work for owner and they need to do cost effective repairs, guarantee the work and provide prompt services to maintain our relationship….Do you think their repair people guarantee the work and work for a 60.00 co-pay. I think not!

Home warranty’s are good for homeowners

RC, FL – Property Manager

We do not recommend home warranty companies.

We have personally lost clients because of home warranty companies.

Every time we coordinate maintenance with a home warranty company it is one problem after another.

First, they rarely respond in a timely fashion, then there is the “he said, she said” between the resident and the home warranty company.

Next, they deny service either on grounds of lack of maintenance or abnormal wear and tear.

When it comes to exclusions and small print, warranty contracts say a claim can be denied for lack of maintenance, improper maintenance, improper installation, pre-existing problems, code violations and numerous other reasons.

Warranties are typically purchased by home sellers or their real estate agents to avoid lawsuits if something breaks in the first year.

Not to be confused with a builder’s warranty, a so-called home warranty — Actually a service contract — is typically purchased for existing homes, especially homes sold by real estate agents. These service contracts generally cost $300 to $600 for a year-long basic-coverage plan that includes items like ceiling fans, water heaters and furnaces.

The contracts come with loopholes. You need to carefully read your service agreement to determine what is and what isn’t covered. Coverage for plumbing, for example, typically ends at your home’s foundation, so leaks or breakages beyond that would be your responsibility. “Pre-existing” problems typically aren’t covered, nor are breakdowns that result from poor maintenance or improper installation.

The contract also may require that a system be upgraded to current building code standards — at the homeowners expense — before they agree to consider repairs.

People who have had problems with the home warranty companies say that the more expensive the repair or replacement, the more likely home warranty companies are to invoke these exclusion clauses.

You don’t have control over who does the work. The home warranty provider contracts with local service companies to perform the actual inspections and repairs. You don’t get to choose, and scheduling repairs can sometimes be a trial. The service technician may also try to sell you unneeded services.

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I have several horror stories we have personally endured due to home warranties.

With all of that said, some owners still want one. Maybe it came with the home and they want to use it.

We will work with the home warranty company, and on our part it is fairly easy. Our clients just need to let their HW company know that Northpoint and its agents are authorized to call in on repairs, and we take it from there.

The only time we might recommend it is if the HVAC has been properly maintained and is near the end of its life AND the HW covers replacement. MOst exclude breakdowns from the circuit board and a few other parts, but would replace a compressor. Not typically worth it long term.

Thank You,

M.T., TX – Property Manager

We normally recommend Old Republic Home Warranty for homes that are over 7 years old. Main expenses with these homes have been:

AC life span is normally 12 years. Hot water tanks nowadays only last about 7 years.

O.B., OK – Property Manager

Just wanted to give you a quick perspective of things we are seeing out here in general regarding Home Warranties, Obviously we are fine if you still want to have your clients purchase them but just wanted to give you another perspective on it. We prefer that the owners do not use a Home Warranty Company to make repairs at their rental property.

There is a HUGE problem in the home warranty industry, and the public is becoming savvy to it.

Try searching Google with the name of your favorite home warranty company and the word `complaints’ or `fraud’. You will be amazed. Find out how many people feel like they got burned, turned down wrongfully, or got seriously bad service. Furthermore, feel free to visit www.my3cents.com for even more examples of this currently growing problem; THERE ARE MANY OTHERS…..

Almost Every time we call a home warranty company for a problem, they deny the service either on grounds of lack of maintenance or abnormal wear and tear. How do you define abnormal wear and tear and lack of maintenance? When it comes to exclusions and small print, Warranty contracts say a claim can be denied for lack of maintenance, improper maintenance, improper installation, pre-existing problems, code violations and numerous other reasons.

Warranties are typically purchased by home sellers or their real estate agents to avoid lawsuits if something breaks in the first year.Not to be confused with a builder’s warranty, a so-called home warranty — Actually a service contract — is typically purchased for existing homes, especially homes sold by real estate agents. These service contracts generally cost $300 to $600 for a year-long basic-coverage plan that includes items like ceiling fans, water heaters and furnaces.

The contracts come with loopholes. You need to carefully read your service agreement to determine what is and what isn’t covered. Coverage for plumbing, for example, typically ends at your home’s foundation, so leaks or breakages beyond that would be your responsibility. “Pre-existing” problems typically aren’t covered, nor are breakdowns that result from poor maintenance or improper installation. The contract also may require that a system be upgraded to current building code standards — at the homeowners expense — before they agree to consider repairs. People who have had problems with the home warranty companies say that the more expensive the repair or replacement, the more likely home warranty companies are to invoke these exclusion clauses.

You don’t have control over who does the work. The home warranty provider contracts with local service companies to perform the actual inspections and repairs. You don’t get to choose, and scheduling repairs can sometimes be a trial. The service technician may also try to sell you unneeded services.

We have had hundreds of problems with home warranties.

We had a bathroom faucet go on the blink; we called the Home Warranty Company. After paying the $55 deductible, their contractor refused to make the repair. So we had our plumber go out and they made the repair for $65. We have experienced this over and over where the owners are spending money on deductibles and then we have to send out our maintenance people to fix the problem.

Our next problem came in the form of a malfunctioning air conditioner. After 2 days with the tenants having no A/C and paying a $50 deductible, The service technician reported that there was lack of maintenance and therefore it had to be replaced and cannot be covered under the Home Warranty. They gave us an estimate of $4,000 to replace a 6 year old A/C system. Also the tenants are staying in a Hotel and want to be reimbursed for their expenses. We sent out our A/C vendor and he said the A/C unit is perfectly fine except that a small part had to be replaced; total cost from our vendor was under $200.

On another property, a dishwasher repair was needed. The home warranty company took 3 months and had make 15 trips out to the property to repair the dishwasher. If you were the tenant how would you feel?

On one property the A/C went out in the summer and it took 21 trips and 3 months before the warranty company finally replaced the A/C. You can be sure the tenants moved as soon as their lease agreement was up. Other tenants would have gotten an attorney and been suing the owner.

Often they will leave tenants hanging without heat or A/C for days while they go through their “second opinion” process. If, as a property manager, I wanted to damage my reputation with as many tenants as possible by providing the lousiest repair service possible, I can’t think of a better way to accomplish that than by using a warranty company on all service calls. They simply are not compatible with the level of service we demand of our vendors.

Our owners have been burned so many times in years past that we finally decided we had enough, and said “no more”. Nothing affects the reputation of a property management company more than the manner in which repairs are handled. Tenants judge us by almost no other measure. It therefore makes little sense to entrust vendors we don’t know, whom we have no relationship with or control over, with the reputation of our company and the relationship with your tenant.

Instead, when repairs are needed we will get whatever Home Warranty company you have out to honor the warranty, provided that they accomplish the service call and repair in a timeframe and manner that is reasonable and just to all parties.

Take a look at Paragraph 18 section F of the tenants lease agreement 18. REPAIRS:F. NOTICE: If Landlord fails to repair a condition that materially affects the physical health or safety of an ordinary tenant as required by this lease or the Property Code, Tenant may be entitled to exercise remedies under §92.056 and §92.0561 of the Property Code.span>If Tenant follows the procedures under those sections, the following remedies may be available to Tenant: (1) terminate the lease and obtain an appropriate refund under §92.056(f); (2) have the condition repaired or remedied according to §92.0561; (3) deduct from the rent the cost of the repair or remedy according to §92.0561; and (4) obtain judicial remedies according to §92.0563. Do not exercise these remedies without consulting an attorney or carefully reviewing the procedures under the applicable sections. The Property Code presumes that 7 days is a reasonable period of time for the Landlord to repair a condition unless there are circumstances which establish that a different period of time is appropriate (such as the severity and nature of the condition and the availability of materials, labor, and utilities.)

Tenants have more rights now than they ever have had in the past and Judges are normally on the side of the tenants and if repairs are not made timely, owners can find themselves on the wrong side of the legal system. It is hard enough to try to use a home warranty on the home that you live in. It is not cost effective or practical to use a home warranty on a rental property.

SR, TX – Property Manager

There may be two answers to your question, one as a homeowner and one as an investor and property manager myself.

First, as a homeowner/investor, I would not purchase a HW for my primary residence nor any of my investment properties. We had a HW in 2002 on our personal residence and although they did fix the AC once (took a few days for the contractor to get out there though) they said they wouldn’t replace it if it ever failed entirely citing improper installation. I thought this odd as the unit was about 13 years old, installed by a reputable company that is still in business by the folks we purchased the home from and inspected by the county with permits and all. As an investor, I would definitely not purchase a HW given my experience in the mgmt. business.

In our property management business, we have had quite a few owners over the years who have had HW in place when we took over mgmt. and I would say in some cases they have been worthwhile but in most a waste of time and money. In situations where something is broken we have to contact the HW company who in turn contacts the local contractor to do the actual work. Sometimes this process is seamless, more often the contractor doesn’t get the order (or claims not to have received it) and we then have to contact the HW company again to re-issue the order or assign a different provider. From there, the contractors complete the order and bill us or bills the warranty company who then bills us although often they try and get the tenant to pay the deductible despite the instructions on the work order to bill us! Lot of confusion throughout the process. For general repairs, for the most part the HW are useful (although a headache to oversee from the mgmt. standpoint) but where they are terrible is in AC issues. By contract, most HW and their contractors have three business days to attend to the problem which means that from the time we initiate the work order, they have three business days to perform the work. In the summer, given that we are generally around 100 degrees, this doesn’t make for good service to the tenants from the landlord/manager prospective, especially given that our own AC vendors typically arrive for service within an hour or two of receiving the work order. The larger issue with HW and AC units is if the unit is dead and requires replacement. In every case in our experience where the unit required replacement (probably 8-10 AC units under HW over the years), the HW company takes nearly a week from the time the contractor first visits/services the unit to the time they indicate they can get it approved. Funny thing though is that we have never had one approved! In each case, the HW company has declined the replacement citing “rust on the outside unit, “ “mismatched units”, “improperly installed”, “improper maintenance” and nearly every other excuse not to replace it you could conjure up! Many of these units we on pretty high end homes and in our opinion, like most insurance companies, the HW companies enjoy taking in premiums but do everything imaginable to not have to pay out.

I can give you tons of other examples and in most cases the owners are so angered by the HW companies response given they purchased the policy in good faith that anything (within reason) that broke would be repaired/replaced that they do not renew them.

Me personally, I wouldn’t own one.

Hope that helps and we get that question quite often as well. Our policy is to explain the pros and cons to the owner and also the very good possibility that many items will not be covered and let the owners decide for themselves from there. We also recommend they read up on the HW companies, consumer reports and reviews, etc. for more information in aiding with their decision.